Amazon expands logistics solution to registered sellers

Amazon is also looking at entering food delivery services and competing with Swiggy, which it reportedly wanted to acquire.Writankar Mukherjee&Shambhavi Anand | ET Bureau | July 31, 2017, 09:06 IST

Amazon is betting big on delivering irrespective of whether the order is placed on its own website or not.

The US behemoth is expanding its logistics business in India by offering the service to its registered sellers even if orders are placed through rival marketplaces like Flipkart and Snapdeal or for their offline distribution.

It is also looking at entering food delivery services and competing with Swiggy, which it reportedly wanted to acquire. It is in initial talks with some food tech startups for this.

Amazon has already started a pilot for the logistic services with 300 sellers for this who are registered in its marketplace, three industry executives aware of the plans said. The company’s own logistic service is undertaken by Amazon Transportation Services (ATS).

This is part of Seattle-based e-commerce giant’s strategy to control a larger pie of the Indian e-commerce market. ATS was earlier mostly servicing the Fulfilled by Amazon (FBA) orders where the seller stores the products in Amazon warehouses from where it is packed and shipped to the customer doorstep.

“Amazon wants to build ATS into an independent logistic service which competes against Flipkart’s Ekart and other independent logistic services like Blue Dart and FedEx. It has started with its own sellers, but eventually will even look at offering logistic services to brands and other businesses. ATS has recently hired a lot of executives from leading courier companies,” said one of the industry executive.

Another executive said Amazon has priced ATS competitively to sellers which is lower than third-party courier services.

“Amazon wants to control each and every segment of the e-commerce value chain, since they also sell packaging materials for online shipments,” he said. When contacted, an Amazon India spokesperson refused to comment on future plans.

A leading home furnishing and craft seller which also sells through Amazon, ExclusiveLane co-founder Dhruv Goyal said that given the very large and extensive sellers portfolio, Amazon would want to encash the opportunity of offering its logistic services to the registered sellers for fulfilling shipments on other marketplaces as well.

“They would also be extending these services to sellers to send their FBA and Cloudtail shipments which are currently fulfilled by logistic companies such as BlueDart, DTDC and FedEx. These companies are going to have a hard time competing with Amazon,” Goyal said.

Ecommerce drives significant investment and value for the Indian logistic sector and has emerged as key growth driver for the logistic industry.

The logistic sector specific to online retailing in India was valued at $0.46 billion in 2016 and is projected to witness a CAGR of around 48% in the next five years to reach $2.2 billion by 2020, according to a report by KPMG and CII.

Rival Flipkart’s logistic arm Ekart is looking to tap offline networks for its courier business and compete with the likes of DTDC, Blue Dart, among others. At present, 90% of Ekart’s resources are used for Flipkart group companies while rest is being utilised for external clients and businesses.